Having good credit is incredibly important in modern U.S. society. It impacts nearly every phase of life. Would you like to purchase a car? You will need good credit. Want to apply for an apartment or rent a house? You will likely be subjected to a credit check. And If you hope to eventually buy a home, you will definitely need a good credit score.
Understanding that is easy, but building credit can be challenging, especially if you are an international student. However there is hope. Here are some tips to help international students build their credit scores.
One great first step is to get a credit card. There are many banks that will issue a credit card with a small limit (perhaps under two thousand dollars) to students. Use the card – but try not to max it out – and make your payments on time or early. Each time you pay your card, you are helping your credit score. Demonstrating that you can handle a small amount of credit responsibly will help show other creditors that you are worth lending larger amounts of money to as well.
Which one is right for you? The answer will be different for each person. You will want to learn the differences between secured and unsecured credit cards, and what terms like APR mean (and how they affect your choice of card). Applying for a credit card is certainly not something you want to do without investing some time in research first.
However the process of determining the best fit is made easier by technology. We live in an age where every product and service is reviewed online, and credit cards are no exception. You can compare different credit card offers so you can make the right choice when applying.
Something else to keep in mind is that credit history is built through reporting with the three major credit bureaus: Equifax, Experian, and TransUnion. Make sure that before you apply for a credit card, you know that it reports to those agencies. Otherwise, the payments you make will not help build your score in the way that you intend.
You will also need a social security number in order to begin building your credit score. Pretty much every major thing you will want to do in life in the United States from getting a loan to paying taxes to getting a job. It serves as an official record tying all of your activities as a citizen together for the government, banks, employers, and other groups. You can follow the steps found here to obtain one if you have not done so already.
Holding down a job while studying can be difficult, particularly if you are an international student who is also worrying about fitting into a new country and learning about a new culture. But earning money is important to building your credit score. The more income you are able to show that you reliably earn, the more likely your chances of being able to secure a loan when you need it later on in life.
You should also make certain to open a bank account. As with a credit card, one of the best ways to prove to creditors that you can handle money is to actually handle money. Opening a bank account, preferably a checking account, will give you a chance to build some financial history.
You will need to be careful in selecting a bank account, as you need to avoid accounts that charge annual fees or other charges. Having a checking account will also make it easier to make your payments on the credit card you will need (as mentioned earlier).
Finally, if you are able to rent a home or apartment while studying, you may be able to report the rent you are paying to the credit reporting agencies yourself. There are a variety of tools available for doing this. As long as you are paying on time, this can be another great way to help build your credit score as an international student.
The process of building credit is essential to starting a future in the United States, but it is not a process that can be completed overnight. But if you follow the various tips we have shared here, you can absolutely expedite the process and find yourself with a good credit score much faster than you would if you did not take steps like opening a bank account or acquiring a credit card. That will then put you on the road to being able to secure larger loans which will make milestones like purchasing your own car or buying your own home more attainable in the near future.